Chapter 24: Legal Aspects of Supply Chain Management
Warehousers • A warehouser stores the goods of others for compensation and has the rights and duties of a bailee in an ordinary mutual benefit bailment. • A warehouser issues a warehouse receipt to the depositor of the goods. • This receipt is a document of title that ordinarily entitles the person in possession of the receipt to receive the goods.
Negotiability of Receipts • In some cases, a warehouse receipt can be bought, sold, or used as security to obtain a loan. • A nonnegotiable warehouse receipt states that the goods received will be delivered to a specified person. • A negotiable warehouse receipt states that the goods will be delivered “to the bearer” or “to the order of” a named person.
SELLER (Depositor) (Bailee) WAREHOUSER (Issuer) (Bailee) GOODS WAREHOUSE RECEIPT BUYER Indorsement and delivery WAREHOUSE RECEIPT value/good faith due negotiation PURCHASER OF WAREHOUSE RECEIPT right to goods or right to negotiate further Due Negotiation of Receipt
Limitation of Liability • A warehouser may limit its liability for loss or damage to goods due to its own negligence to an agreed valuation of the property stated in the receipt. • The depositor must be given the right to store the goods without the limitation at a higher storage rate.
Types of Carriers • Common Carriers • Furnish transportation of goods for a price; available to the general public. • ContractCarriers • Furnish transportation of goods according to a specific contract with a specific party. • PrivateCarriers • Transport goods owned by the carrier’s owners.
Common Carrier of Goods • A common carrier of goods transports goods received from the general public, and issues a billoflading or an airbill. • These are documents of title and provide rights similar to a warehouse receipt. • A common carrier is absolutely liable for loss or damage to the goods unless the loss was caused solely by an act of God, an act of a public enemy, an act of a public authority, an act of the shipper, or the inherent nature of the goods.
Factors (Consignment) • A factor is a special type of bailee who has possession of someone else’s property for the purpose of selling it. • This arrangement is commonly called sellingonconsignment, and the owner is called a consignor. • The factor, or consignee, receives a commission on the sale.
Hotelkeepers • A hotelkeeper provides accommodations to transient persons called guests. • Subject to exceptions, at common law hotelkeepers were absolutely liable for loss or damage to their guests’ property. • Most states, however, provide a method of limiting this liability. • A hotelkeeper has a lien on the property of the guest for the agreed charges.